And he calculated tearing down trade barriers after we leave will boost growth and bring consumer prices down by 8p in the Pound.

Prof Minford said: “Prices are 20 per cent higher inside the EU compared with world prices.

“The system is designed to keep prices up and consumers are paying for this.

“But if we pulled out, your average Sun on Sunday reader would be 40 quid a week better off.

Well, that’s sorted then. Punch a few numbers into the Minford Model and it turns out that £40 will magically materialise in our wallets the moment we achieve Brexit. Great! That will just about cover the cost of a bottle of Veuve Cliquot to toast the restoration of our democracy.

8 thoughts on “With Allies Like These…”

It’s not that Minford’s model specifically is bad. For all I know it could be brilliantly constructed, and he is an economist of some renown. The problem with economic models though is that they are only as good as the numbers you feed into them, and with Brexit there are so many variables and so many different numbers and facts that you could make an economic model tell you almost anything you want. So my objection is more around the fact that the official Leave and Remain campaigns exchanging tit-for-tat statements each saying that Brexit will save or lose the British taxpayer a laughably specific sum of money detracts from their credibility and is time which could be better spent talking about the real issues (i.e. sovereignty and democracy) or outlining a plan to reassure voters that Brexit can be achieved with the minimum of economic disruption.

Then I’m afraid I have to disagree with your conclusions on this article. Minford does not appear to be using some obscure sophisticated economic model a la Osborne.

It looks like all he’s doing is taking taking off the costs of EU trade tariffs from imports. It’s a very simple calculation, and he explains what he’s doing in the Sun article. With EU protectionist tariffs removed, indeed the cost of imported goods will go down. There’s no economic model involved, it’s actually self-evident.

On the other hand, Osborne’s approach is “trust us, we’re the experts, and this is our estimate”. I just don’t think the two approaches are comparable.

I would add that economic counter-arguments are important for the Leave campaign, because the Remain campaign is actually using fear of economic loss to scare converts into sacrificing the principles of democracy and sovereignty. This is complementary to what you are advocating, as outlining the financial benefits helps reassure the voters against economic uncertainty.

I agree on this latter point – more needs to be done to rebut the Fear, Uncertainty and Doubt (FUD) perpetrated by the Remain campaign on the economic front. I’m just not sure that this “£40 a week better off in the event of Brexit” claim is the fightback that we need.

I appreciate what you say and I agree that looked at purely in isolation, the article’s statement that “But if we pulled out, your average Sun on Sunday reader would be 40 quid a week better off” might therefore be true, but this ignores all of the other economic effects, working in both directions, which Brexit will cause. To claim that British taxpayers will be on average £40 better off when looking at just this one one aspect (no longer leving EU trade tariffs on imports) of Brexit and ignoring everything else from FDI to exchange rate fluctuations is misleading. It attempts to be incredibly specific in promising a certain amount of money if taxpayers vote one way, when this cannot possibly be known.

If he had stopped after making the point that no longer levying the common external tariff on goods from outside the EU would lower costs for consumers then that would be fine, but he goes on to assume that absolutely nothing else would change in the entire economic realm in the event of Brexit, and that consequently everyone will pocket £40. That’s the part which I find simplistic and object to.

That’s a fair point, but it seems as if people do want specific values. Arguing on principle alone isn’t sufficient for a lot of people.

I agree that the economy is more complicated than simple costs, but many non-economists don’t care very much how the economics play out; they tend to care how it affects them directly. Simple answers and specific numbers appeal to some people. Maybe he was tailoring his response to the paper’s target audience?

I feel compelled to point out that simple economics indicate that uncertainty will drop the value of the pound, which will lead to an increase foreign investment… 😉